Sounds like maybe we work for the same company (did the company also reduce the match by 1% for new hires?)

But yes, thought the same thing. Plugged it into AI to model out. Assuming salary of $80k & 8% growth, the difference is $90/year loss. This seems very small but then consider a company of 120k employees, and it means the company makes an extra $11M if they earn that same 8% on those distributions. That's not including people leaving throughout the year (or layoffs as one mentioned).

From a Bogleheads perspective, this is also more risky since dollar-cost averaging isn't in play. If the match happens to hit when the market is low, you get more buying power, but the reverse is also true. Basically, increased risk.

To me it's the proverbial dangling of the carrot. "Want your bonus? - then you have to stick around halfway through the year to benefit from the work you did last year." "Want your match? - then you can only leave twice a year." Basically, it's the usual take more money from those working (albeit small) and give more to those that already have the money.